R&D Requirements and Quality Control Strategies for Exporting APIs Overseas

APIs are important raw materials for manufacturing drugs. The global API market will reach US$185.9 billion in 2022. In the increasingly fierce global competition, countries are constantly increasing their requirements for the quality, safety and innovation of APIs. The R&D and manufacturing of APIs in China must comply with global development trends, continuously increase investment in R&D, and improve core competitiveness; strictly control quality and improve the quality control system; raise environmental awareness, develop a circular economy model, and promote healthy competition in the API market.

China's API industry will continue to move towards a new stage of high-quality development, while enhancing domestic endogenous power and reliability while creating new international trade advantages. This article focuses on the analysis of global market insights, new situation R&D requirements, and quality control strategies to help APIs sail overseas.

I Global API Market

1. Competitive landscape of global API market
From a global perspective, APIs are mainly concentrated in five major production regions: Western Europe, North America, Japan, India and China. Powerful countries in the preparation of APIs such as Europe, the United States and Japan mainly rely on their mastery of relatively advanced chemical synthesis processes and patents and technological advantages to earn high added value from their products, mainly featuring specialty APIs and patented APIs.

China and India have advantages in raw materials and labor costs for the production of bulk APIs. They rely on their cost advantages to occupy an important position in the API market and mainly focus on the production of bulk APIs. As manufacturers of specialty APIs in developing countries such as China and India continue to increase investment in R&D, improve production technology, improve process levels, and invest in improving production equipment to form specialized production lines, Chinese and Indian API companies are also gradually extending into the high-end value chain of APIs.

2. API market size

Affected by the epidemic in 2020, the global API market size dropped to US$175 billion, a year-on-year decrease of 3.79%. The global API market has rebounded in 2021, reaching US$177.1 billion, a year-on-year increase of 1.2%. The global API market will reach US$185.9 billion in 2022, a year-on-year increase of approximately 5%.

It is predicted that it will grow at a compound annual growth rate of 6% from 2023 to 2032, and the global API market is expected to reach US$363.7 billion in 2032.

3. China’s API exports

1) Export value of raw materials reached US$51.8 billion
China's exports of chemical raw materials continue to grow, from US$15.98 billion in 2010 to US$35.7 billion in 2020, doubling in 10 years. In 2022, China's API export value will be US$51.8 billion, a year-on-year increase of 24.04%.

2) Export volume of raw materials reached 11.94 million tons
From 2012 to 2022, China's API export volume showed an overall growth trend. In 2022, China's API exports reached 11.94 million tons, a year-on-year increase of 8.74%.

3) The export price level of API industry is on the rise
From 2017 to 2021, the average export price of China's APIs has shown an overall upward trend. In 2022, the average export price of China's APIs increased by 18.37% year-on-year.

4) Amino acids and their derivatives are the main products exported by China’s APIs
The key API products exported from China include antipyretics and analgesics, penicillins, cephalosporins, aminoglycosides, hormones, lincomycins, vitamins, tetracyclines, central nervous system drugs, cardiovascular system drugs, amino acids and their derivatives, anesthetic drugs, etc. Among them, amino acids and their derivatives accounted for the highest proportion of export value, accounting for 35.27%, followed by vitamins, accounting for 28.05% , the third one is hormones, accounting for 8.21%.

II. R&D requirements under the new situation

1. Realistic challenges

This kind of leadership in China's API industry is actually just a lead in terms of quantity, and it still lags behind in terms of real product added value. The entire industry is also facing many challenges:

There is overcapacity and serious homogeneity and duplication of production. Low-level duplication of construction of APIs is very common in China, and the problem of overcapacity is prominent, resulting in low-price competition and waste of resources, thus forming a vicious cycle. Moreover, the number of API companies in China is increasing, and many companies are continuing to build production bases on a large scale and blindly expand production capacity.

Product conversion ability is weak and added value is low. The API products exported by China are actually still at the bottom of the value chain, and the current domestic API production technology level is still far behind that of other countries.

The pressure on environmental protection is great and rising costs are unbearable. The problem of API pollution has always been criticized. Due to the pressure of environmental protection, Chinese API companies have been migrating from the city center to the suburbs, from non-chemical industrial parks to chemical industry concentrated areas, and from developed eastern coastal areas to less developed areas in the central and western regions. In addition, many factors, including environmental protection, have also led to rising costs for API companies, making it unbearable for many companies.

The external environment is becoming increasingly severe and international standards are constantly improving. The European Union, the United States, etc. have put forward higher requirements for the import of APIs, including process, technology, quality, registration, access and other aspects. This is exactly what many Chinese API companies are missing. How to realize the transformation and upgrading of API products, enterprises and industries is a practical problem facing us.

2. Development trends 

Based on the above realistic challenges, combined with the ongoing consistency evaluation and bulk procurement, China's pharmaceutical raw materials will usher in the following development trends:

Bulk APIs will gradually phase out backward production capacity and move toward concentration;

The state and enterprises will accelerate the application of new technologies, including continuous flow production technology and synthetic biology technology.

Strong companies will make more efforts towards high-end specialty APIs and patented APIs;

More companies will extend vertically to the upstream intermediates and downstream preparations of the industrial chain, and/or enter the C(D)MO industry;

As environmental protection and cost issues become increasingly prominent, more API companies will shift from first- and second-tier cities to third- and fourth-tier cities, and from economically developed coastal areas to inland areas.

 3. Trends in R&D requirements for exporting APIs overseas

The competition in the global API market is becoming increasingly fierce, and countries are constantly increasing their requirements for the quality, safety and innovation of APIs. In response to these challenges, the research and development requirements for overseas APIs have gradually shown the following trends:

First, increase investment in research and development and improve core competitiveness. In order to maintain a leading position in the fierce market competition, API manufacturers need to continuously increase investment in research and development, optimize production processes, and improve product quality and safety. At the same time, through technological innovation, we enhance the core competitiveness of products to meet the needs of domestic and foreign markets.

Secondly, strict quality control and improve the quality control system. In the process of R&D and production of APIs, quality control is a key link. Manufacturing companies need to establish a sound quality control system and strictly control the physical and chemical properties, microbiological indicators and other parameters of raw materials, intermediates, and finished products to ensure the stability and reliability of products.

Finally, raise environmental awareness and develop a circular economy model. As global environmental awareness increases, API manufacturers should actively adopt environmentally friendly production technologies and equipment to reduce waste emissions during the production process and reduce their impact on the environment. At the same time, we will develop a circular economy model to achieve effective use of resources and promote the sustainable development of enterprises.

In short, in the face of fierce competition in the global API market, by increasing R&D investment, strict quality control and promoting green and environmentally friendly production, China's API industry will continue to move towards a new stage of high-quality development and make greater contributions to human health. contribution.

III. Quality control strategy

1. Drug impurities

Impurities refer to substances produced or introduced during drug production, transportation, storage, etc. that affect the purity of drugs. In ICH Q3A(R2), pharmaceutical impurities are divided into three categories: inorganic impurities, organic impurities and residual solvents.

The basic idea of impurity research and control is to start with the analysis of the source of impurities, and analyze various potential impurities such as intermediates, by-products, degradation products, reaction materials, etc. that may exist in the product based on the actual production process and structural characteristics of the product. Through impurity spectrum analysis, we can comprehensively grasp the impurity profile of the product, and establish appropriate analysis methods based on the risk levels of various potential impurities to ensure the effective detection and confirmation of various potential impurities.

Impurity confirmation includes the confirmation of specific impurities and non-specific impurities, the confirmation of toxic (bioactive) impurities and general impurities, and impurity spectrum analysis, etc. The purpose is to provide a basis for impurity control and limit determination; The determination of impurity limits is to formulate safe and reasonable limits based on the comprehensive characteristics of impurities, acceptable levels, and levels that can be achieved in large-scale production; The control of impurities is based on the results of impurity research, through the source control of raw materials (source and quality), the process control of the preparation process (key steps and process parameters), stability control (storage conditions, validity period determination) and other measures to control impurities in a safe and reasonable range.

2.Guiding Principles

Impurity research is one of the key elements in the quality assurance of raw materials. It is also an area of focus, continuous deepening, and rapid development in drug research and development at home and abroad. As people's understanding of the rules of drug research and development continues to deepen and analytical technology continues to develop, the concept of impurity research has gradually become systematized, and regulatory measures have become increasingly mature.

3. Process impurity classification

Chemical raw material impurities mainly include process impurities and degradation impurities, process impurities that exist in the formation process, including reaction intermediates, by-products, isomers, reaction raw materials and additives introduced in other impurities. Degradation impurities refer to the impurities generated or increased during the storage process, mainly the impurities generated after the decomposition, polymerization, oxidation, hydrolysis and other reactions of drug molecules.

4. Related substances

Case 1

Intermediate limit control strategy - reasonable formulation of intermediate limits.

The remaining amount of compound A is less than 5%, which can meet the requirements of product production.

Case 2

Intermediate quality control strategy - Control of relevant substance limits depending on the source of impurities.

Acetic acid was added in the synthesis process of compound 2, and acetic acid would compete with cyanoacetic acid to produce impurities, so the residual amount of acetic acid in compound 2 was strictly controlled.

Case 3

Product quality control strategy - related substance control advance.

In the synthesis process of the target product, there is no refining effect in the salt formation process, because we use a way to reduce the product purity of compound 2 to less than 0.1% into the synthetic product.

5. Genotoxic impurities

The research and control of genotoxic impurities has attracted much attention. EMA, FDA and ICH have formulated corresponding guiding principles for such impurities, providing guiding suggestions and technical requirements for the confirmation, research and control of genotoxic impurities. At present, the identification, classification, quantitative analysis and control of genotoxic impurities are mainly based on ICH M7.

6. Elemental impurities

Elemental impurities mainly target the residues of reagents, catalysts, ligands, etc. in the synthesis and production of drugs, as well as metal impurities introduced into containers that come into contact with drugs. EMA, FDA and ICH have successively promulgated relevant guiding principles for the control of metal impurities, clearly proposing the classification and limits of metal impurities.